Environment literally means the surroundings
, external objects, influences or circumstances
under which someone or something exists. The
environment of an organization is the aggregate
of all conditions, events and influences that
surrounds and affects it. Since the environment
influences an organization in many ways, its
understanding is of crucial importance.
According to Philip Kotler, “Marketing
environment refers to the external factors
or forces that affect the company’s ability to
develop and maintain successful
relationship with its target customers”.
Marketing Environment consists of two
It refers to the company’s immediate environment i.e.
those environmental factors that are in its proximity.
These factors affect the company’s prospects directly.
Micro environmental factors are as under:
Organisational internal environment: It
consists of different inter- related groups of an
FACTORS OF MICRO
Suppliers : The suppliers to a firm provide
resources that are needed by that firm and thereby
alter its competitive position and marketing
capabilities. There are raw material suppliers, energy
suppliers, suppliers of labour and capital etc.
Intermediaries: Market intermediaries are
business houses or individuals who come to the aid of
the company. They are middlemen
(wholesalers, retailers), distributing agencies etc.
Customers: The customers of a company
may be of five types:
1. Ultimate customers
2. Industrial customers
4. Government and other non- profit
5. International customers
Competitors: Competitors are those who sell
the goods and services of similar description in
the same market. Identification of competitors is
of utmost importance. Therefore it is essential to
build an efficient system of marketing.
Public: A public is defined as “any group that
has an actual or potential interest in or impact on
a company’s ability to achieve its objectives”. To
build goodwill and to seek favourable response, it
is very crucial for a company to satisfy its general
public as well.
Macro environment refers to those factors
which are external forces in the company’s
activities and do not concern the immediate
environment. These are uncontrollable
factors which indirectly affect the concern’s
ability to operate in the market effectively.
FACTORS OF MACRO
Political and legal factors
Soci0- cultural factors
Demographic factors: Demography is
the study of population in terms of
size, density, location, age, gender, occupati
on etc. These factors have a huge impact on
the marketing decisions of the company.
For example, a growth in population means
increasing human needs which results in
the expansion of product markets, if there
is sufficient purchasing power.
factors: It consists of factors related to
the means of production and distribution of wealth that
have an impact on the functioning of an organisation. It
affects the spending power of people. Further economic
development and growth affects the product choice of
the customers. For example- per capita income, Balance
of payment position, Gross national
product, inflation, deflation etc.
factors: Components of
physical forces are the earth’s natural
renewable and non renewable resources.
Natural renewable resources are forests, food
products from agriculture or sea. Non
renewable resources are finite such as
oil, coal, minerals etc. both these
components often change the level and type
of resources available to a marketer for his
Technological factors: Advances in technology
are an important uncontrollable environment for
marketers in two ways: First, they are totally
unpredictable; and secondly, the adoption of new
technology is often prevented by constraints imposed
by internal and external resources. It is a source of
new and better products. For example advancement
in communication and infrastructural technologyelectronic marketing, video conferencing etc.
and legal factors: These
factors include the policies related to public
sector, small scale industries, sick
industries, import and
export, licensing, development of backward
areas etc. the vast governmental network of
laws and regulations have varied impact on
Cultural factors: It comprises of
society and culture. A society is a set of relations
among people including their social status and
roles. Culture consists of attitudes, customs, beliefs
and values of a society.